Cirrus Logic Inc. Stock Downgraded (CRUS)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- Cirrus Logic (Nasdaq: CRUS) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and increase in net income. However, as a counter to these strengths, we also find weaknesses including premium valuation and weak operating cash flow.

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Highlights from the ratings report include:

CRUS's very impressive revenue growth greatly exceeded the industry average of 3.9%. Since the same quarter one year prior, revenues leaped by 90.7%. Growth in the company's revenue appears to have helped boost the earnings per share.

CRUS has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, CRUS has a quick ratio of 1.90, which demonstrates the ability of the company to cover short-term liquidity needs.

CIRRUS LOGIC INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CIRRUS LOGIC INC reported lower earnings of $1.30 versus $2.81 in the prior year. This year, the market expects an improvement in earnings ($3.45 versus $1.30).

Net operating cash flow has significantly decreased to -$48.23 million or 282.35% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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Cirrus Logic, Inc., a fabless semiconductor company, develops signal processing integrated circuits (ICs) for audio and energy markets. The company has a P/E ratio of 25.5, above the S&P 500 P/E ratio of 17.7. Cirrus Logic has a market cap of $2.63 billion and is part of the technology sector and electronics industry. Shares are up 128% year to date as of the close of trading on Friday.